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Enlarge ImageRequest to buy this photoCarolyn Cole | Los Angeles TimesShawn Melamed of Global Trading Systems stands by the microwave tower in Carteret, N.J., that sends data from Nasdaq to the Chicago Mercantile Exchange in Aurora, Ill., in 4.13 milliseconds.

NEW YORK — Ari Rubenstein, a
Star Trek fan who counts physics as a hobby, wants to boldly go where Wall Street has
never gone before: the speed of light.

Rubenstein heads Strike Technologies, a New York company that’s part of a budding cottage
industry racing to build networks of ultrafast microwave radio transmitters linking the world’s
financial hubs.

It could be the final frontier in the financial industry’s tech arms race as the fastest traders
scramble to get even faster, and as regulators mull over ways to prevent technology breakdowns on
Wall Street. Industry insiders say that some firms are toying with lasers and high-altitude
balloons.

Strike, whose ranks include academics as well as former U.S. and Israeli military engineers,
hoisted a 6-foot white dish on a tower rising 280 feet above the Nasdaq Stock Market’s data center
in Carteret, N.J., just outside New York City.

Through a series of microwave towers, the dish beams market data 734 miles to the Chicago
Mercantile Exchange’s computer warehouse in Aurora, Ill., in 4.13 milliseconds, or about 95 percent
of the theoretical speed of light, according to the company.

Fiber-optic cables, which are made up of long strands of glass, carry data at roughly 65 percent
of the speed of light.

Promoters of the technology say it could afford all investors an equal footing. If everyone —
retail brokerages, public pensions, hedge funds — knows simultaneously where stock and futures
markets are moving, the firms with the deepest pockets won’t necessarily have an edge, they
say.

“Unless somebody comes up with superluminal particles or something like that, nothing is going
to be faster than this,” said Rubenstein, president and chief executive of Strike’s parent company,
market-maker Global Trading Systems. “We’re going to democratize the industry.”

The Nasdaq-CME hookup marks the first time two major U.S. exchanges have offered market data via
a microwave link to trading shops on Wall Street.

NYSE Euronext Inc., parent of the New York Stock Exchange, is following suit and plans to roll
out a similar U.S. service “in the near future,” a spokesman said.

The exchange operator has already let firms set up microwave links from its data center outside
London to German markets in Frankfurt.

Still, some regulators fear that Wall Street technology gives high-speed firms a leg up on less
sophisticated investors who can’t trade as quickly.

“I’m concerned that the advent of superfast technology has made markets more of a playground for
the wealthiest traders out there,” said Bart Chilton, a member of the Commodity Futures Trading
Commission.

Mary Jo White, chairwoman of the U.S. Securities and Exchange Commission, has said the agency is
studying high-frequency trading’s effects on the market.

“We know there’s an advantage of speed for high-frequency traders, but what is not well known
are the impacts of high-frequency” traders, White said at a financial industry conference in New
York last month. “Are they helping? Are they harming? Are they doing both?”

Although this might seem like how Captain Kirk might day-trade, microwave technology is decades
old.

Once used for military radar during World War II, microwave signals have found everyday uses for
consumers in the past decade, said Harish Krishnaswamy, a professor of electrical engineering at
Columbia University who has advised financial firms on the topic. Home-entertainment setups and
cellular networks use similar types of radio signals.

The systems are not without their drawbacks. Bad weather can disrupt microwave transmissions,
but operators can amp up the signals.

“You can overcome rain with more power,” Krishnaswamy said. “You can always try and blast
through.”

Microwave transmissions are just the latest Wall Street tool used to sell or buy before someone
else. It’s a centuries-old pursuit; some people used carrier pigeons to fly orders to markets
before the advent of the telegraph and telephone.

Before the rise of telecommunications, Wall Street firms would regularly hire quick-footed young
traders to run orders from brokerage houses to exchange floors, said Charles Geisst, a Wall Street
historian at Manhattan College.

“You just want to be in front of the other guy,” Geisst said.

Wall Street’s race to be faster has concerned some regulators who worry increased speed has made
markets unsafe.

One stomach-churning market breakdown came in 2010 with the “flash crash,” in which the Dow
Jones industrial average lost nearly 1,000 points before quickly recovering.